Finance

Why you Should Adopt a Monthly Payment Plan for your Membership Organization

Find out how your membership organization can reach new heights by switching to a monthly payment plan.


Membership organizations today

Membership organizations today often adopt annual payment cycles, which means that they receive payments from their customers once a year. This payment is usually collected through an invoice, which, in turn, is handled manually in many membership organizations. Furthermore, the use of invoices can arguably lead to a higher churn (loss of members) as it demands more effort. In today’s automatic, subscription-based society, this could be viewed as negative. Imagine having to pay for your Netflix subscription or gym membership each month by receiving a paper invoice. Doesn’t sound very appealing, does it?

 

Why you should switch to a monthly payment cycle

This leads us to the proposal of switching from your annual payment cycle to a monthly one. With a monthly payment cycle, since the transaction is spread onto 12 months rather than one, the price for the customer is lower, which reduces the barrier of entry. This results in a smaller commitment level than with an annual payment plan as the customer views the price to have a lower impact on their bank account.

Comparing the two payment plans, charging a customer annually often means that the membership has to be renewed every year in connection with them having to pay the invoice. This can be argued to cause a higher churn as it is one more action that has to be taken by the member.

On the other hand, if you adopt a monthly recurring payment plan, this churn can be reduced as the payment will be withdrawn automatically each month from the member’s credit card or bank account. This also means that the membership is automatically renewed and the customer only has to take action if they want to cancel the subscription, otherwise, everything else is handled without any effort on the member’s part. This often leads to the membership being renewed for a longer time than with an annual payment cycle.

Referring back to the Netflix and gym membership example, it’s also relevant to consider a monthly payment cycle to attract younger generations. Your 50+ members might not mind your once-a-year paper invoices, but a 20 something will. They want digital, zero effort payment methods. And as we all know, the younger generations are the future, your 60-year-old members are not going to be your cash cows forever. So, thinking long-term, you need to start attracting young people, and you do that by offering a monthly recurring payment plan.

 

Addressing the problems with the switch

Switching from an annual to a monthly payment cycle is not all fun and games, there are also problems that will arise in connection to the switch. First of all, if you’re a membership organization that currently use paper invoices as a payment method, the switch will result in 12 times more paper per member, which in turn will lead to an increase in cost and environmental impact. Another issue that’ll arise with merely switching is that it won’t solve the churn problem because the customer will have to actively pay for the membership each month. Furthermore, if your administrative process is manual, this will also lead to an increase in workload. This is where the recurring payment method will be your lifesaver, as it will get rid of your problem with handling more invoices and minimise your workload. However, depending on your business, this part might need you to partner up with a payment provider. By using Waytobill’s checkout solution, you can digitalise your workflow and say goodbye to paper invoices. If you want to know more about our solution, you can visit our website and contact us.

 

Let's switch

There are a lot of benefits connected to switching your subscription business to a monthly payment cycle. It’ll be easier to sell your membership and to get potential customers to sign up. With access to a payment provider, you’ll get rid of paper invoices, your workload will decrease, and the digitalization that comes with the partnership will solve the cost and environmental issues. However, it’s important to recognize the advantages and disadvantages of monthly payment cycles to unleash the full potential for your business.

Modernise your payment methods

Take control and digitalize your payments. Contact us today! Your effortless checkout journey awaits.

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